Municipal Systems Bill: hearings (afternoon)

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORFOLIO COMMITTEE; LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
9 May 2000
MUNICIPAL SYSTEMS BILL: PUBLIC HEARINGS

Afternoon Session

Relevant submissions:
Office of the Auditor General
Business South Africa
NEDLAC
ASCORA (Atteridgeville/Saulsville Concerned Residents Association)
Unicomm
Cape Metropolitan Development Council
Kwazulu-Natal: Department of Traditional and Local Government Affairs
District Council from Northern Cape

SUMMARY
Issues such as the Bill's potential conflict with the constitutional mandate of the Auditor General regarding the audit of Local Authorities, the proposed immediate promulgation of Chapter 8 of the Bill, the need for training and preparation now in anticipation of implementation of the Bill and the role of SALGA in various processes were raised and discussed. The need for public participation was stressed however there was some confusion and disagreement as to the extent of the public's role in the decision making process of municipalities. The principle of Integrated Development Plannng was also accepted, but there was some disagreement as to the extent to which this had to be legislated on.

MINUTES
Office of the Auditor General
The Auditor General, Shauket Fakie, addressed issues such as the Bill's potential conflict with the constitutional mandate of the Auditor General regarding the audit of Local Authorities, fixed by Clause 188(1)(b) of the Constitution. The Bill purported to allow the Minister to "… regulate in more detail the audit process." It was also felt that Chapter 6 had to be harmonised with the Municipal Financial Management Bill. Specific comment was made in relation to various sections of the bill.

Business South Africa
Ms Laurraine Lotter submitted that whilst the Bill would only be promulgated after the Municipal Elections, BSA wanted Chapter 8, dealing with Municipal Services, to be promulgated immediately. The need for better financial management and service delivery was addressed. On specific comments with regard to the Bill, she addressed public participation , Integrated Development Planning, Performance Management, Municipal Services and Credit Control.

Nedlac
Ms Khanya Mjiyako, Nedlac's Development Chamber Coordinator, outlined in some detail the concerns that had been raised by Government, Business and Labour in Nedlac's consideration of this Bill. The focus was placed on a broad range of clauses in the Bill such as clauses 3, 5, 8, 11, 13, 26 40 to mention a few. The agreements reached on policy principles as well as reservations were outlined; for example, Government agreed to delete "the extent necessary" and "seek to" in clauses 3(b) & (c). They also agreed to redefine the words "resident", "community" and "stakeholder" in clause 5.

Ascora
Mr Themba Ncalo, Ascora's General Secretary, proposed cost-saving measures and tariff policy in terms of which poor households should have access to at least basic services. The Government's Poverty Relief Fund had to play a role here.

Unicomm
The Unicity Committee comprising the seven councils in the Durban Metropolitan Area was represented by Mr Logi Naidoo. They unreservedly supported the intention of the legislation to provide a framework for the establishment of developmental Local Governments as well as provision for municipalities to undertake integrated development planning, performance management, citizen participation, review and rationalisation of service delivery. It dealt in detail with various sections of the Bill.

Cape Metropolitan Development Council
Mr Percy Frederic and Ms Joy Gibbs welcomed in particular the Bill's reference to public participation and emphasised the need for social dialogue and the involvement of the community in the decision-making process in municipalities. They also welcomed the definition of Municipality in the Bill, which included residents, communities and ratepayers.

Kwazulu-Natal Department of Traditional and Local Government Affairs
Mr F Brooks presented the submission which dealt with Chapter 5 on Integrated Development Planning. The submission had three objectives in mind: (a) the alignment of the Municipal Systems Act with new provincial planning and development laws; (b) the alignment of other national laws with the Municipal Systems Act rather than with individual municipal processes; and (c) the prevention of the abuse of legislative powers to undermine integrated development planning.

Northern Cape District Councils
Ms H Jenkins presented submission. They did not have a written submission ready. She said that the Bill was a well planned and work-shopped document that established the content of developmental Local Government. The Bill outlined the principles, mechanisms and processes that were required to achieve it. She noted that they supported the SALGA submission and had submitted their comments to SALGA as well. District councils were vital vehicles for achieving region-wide social and economic development with a duty to promote the equitable distribution of resources amongst the municipalities particularly to marginalised communities.

Having established the basic foundation of participatory governance for Local Government, the Bill defined it by setting out the rights and duties of governing structures, residents and communities. However the Northern Cape District Councils had a concern that they might be faced with residents demanding immediate delivery on these duties without taking into consideration the municipality's financial and administrative capacity. They suggested in the Section 3 that "must" had to be followed by "strive to".

Section 13 of Chapter four states that the municipality had all its powers and functions assigned to it in terms of Sections 156 and 299 of the Constitution, subject to Chapter five of the Municipal Structures Act which reads:
"A municipality has the right to exercise any power concerning a matter reasonably necessary for or incidental to the effective performance of its functions."

If the Bill gave municipalities a general empowerment, this would be an enormous and fundamental legal transformation for the better. Section 13 deserved extremely careful review to ensure that it in fact gave general empowerment to municipalities. On the face of it, it did not and there was a concern that this would impact on delivery.

They unconditionally supported Chapter 7, Local Public Administration and Human Resources, and it was noted that Local Government was bound by the principles of Batho Pele. The structures, functions and roles related directly to the Municipal Structures Act. The establishment of well functioning, financially viable, socially responsive, accountable and developmental local Government was the single biggest transformation challenge. Local Government had the constitutional responsibility for the provision of basic needs and most essential services and how one responded to these challenges would be critical if a viable Local Government system at district level was to be realised.

Discussion
The NCOP committee chairperson, Mr M Bhabha, asked the Department how many versions of the Bill there had been - since it had transpired that the Auditor General and Nedlac submissions had been based on an earlier draft of the Bill. A representative from the Department noted that there had been two versions.

The NA committee chairperson, Mr Y Carrim, said that when newspaper advertisements for submissions had been placed, it had been clearly indicated that the Bill was available from a contact number supplied. When invitations were sent out, this was also stressed. So in all fairness to the Department, any organisation coming to the hearings should have read the appropriate version. This did not however detract from the points being made by the various institutions.

Mr P Smith (IFP) said that one of the points made by the Auditor General was the lack of capacity amongst municipalities and they had noted that 17% of municipalities had not handed in their financial statements, a year and a half after the end of the financial year. He asked to what extent this problem would be real after elections in the newly demarcated municipalties. If one went through an auditing exercise of capacity in municipalities after November, did the Auditor General anticipate problems in complying with the requirements of the Act and the ability to provide financial statements timeously.

The Auditor General said that it was a bit difficult to assume or pre-empt what the situation would be. He however said that he could share what had occurred during the previous amalgamation/consolidation subsequent to the 1994 election. In this period it was found that for about two years, there was a deterioration in capacity and timeliness of submitting financial statements. Consideration also had to be given to the fact that many of the former black local authorities, who had not been provided with any infrastructure in the past, had to amalgamate with some of the bigger local authorities. Experience from this indicated that there was a deterioration for at least two years before capacity and skills built up and there was an element of improvement. However the element of improvement was so slow that five or six years down the road, 17% of local authorities had still not submitted their financial statements almost a year and a half after their financial year end.

Mr M Bhabha asked if the Auditor General did foresee problems, what alternatives to the provisions of the Act there were. He asked whether he was looking at transitional arrangements and what this would entail.

The Auditor General said that there had to be some element of transitional arrangements included in the Act. In addition to this, what was very important was that if one believed that this was a problem and one identified what the Act required in terms of accountability, some kind of training and development had to be put into place now rather than waiting until the Act came into being. The other factor to take into account was that currently the only requirement was that one had to prepare financial statements whereas the new requirements would be far more than just preparing basic financial statements. He felt that there had to be a very intense training and development program already in place in order to build capacity and train people so that the Municipal Systems Bill could be implemented at grassroots level.

Mr Bhabha noted that two realities had to be faced. Firstly the Local Government election in November was right in the middle of a financial year. There would thus be a new group of people coming in - both in administration and council - as the administrations would be readjusted and reconstituted. Secondly, the reestablishment of municipalities would affect the effectiveness of municipalities and readiness to comply with the provisions.

An ANC member wanted an opinion from the Auditor General in relation to the general outcry within Local Governments that there were offices without computers and other facilities for example.

The Auditor General said that this was a valid concern and he did not have a straightforward answer to this. As part of the planning that he had spoken about earlier, one needed to look at what the human resources and financial requirements were in order to deliver what the Bill required. The other infrastructural requirements, such as computers and offices, also had to be looked at. Coming out of this exercise, it might necessary to consider phasing in the Bill, perhaps over a year.

Mr Carrim said that Business South Africa had raised the issue of the Bill coming into effect only after the municipal elections and had suggested the immediate implementation of Chapter 8 before the elections so that the restructuring took place within the framework of the Act . On the one hand one could understand the need for this, as issues were being raised about restructuring and what exactly the legal framework was for this. On the other hand given the complexity of the issue and the need to arrive at relative consensus, there was an imperative not to jump into it too soon. Moreover, it seemed to him that one could not divorce Chapter 8 from a whole field of other chapters in the Bill as they were inter-related.

There were other broad parameters and frameworks within which the current restructuring was taking place. Restructuring was meant to take place in anticipation of the Bill. The Municipal Structures Act would not be implemented until after the elections.

Ms L Lotter of Business South Africa said that BSA would clearly prefer to see the whole Bill implemented before the elections. They felt that the previous transformation of local authorities had been costly and they believed that both the Municipal Structures Act and the Municipal Systems Bill had learnt from these mistakes and were trying to pre-empt those mistakes. They really wanted to see a situation where the guidance that was provided by this legislation was used. When one tried to do this at the same time as one went into new types of service delivery options, the number of problems that one could create became significantly exacerbated.

BSA would thus really like to see the service delivery options section done at least within the framework. It might be possible not to have the whole chapter but at least require that at the time of the elections there had to be service delivery options in place. There seemed to be a specific intent in the Bill to focus on a particular range of service delivery options. Having gone through all the effort of the White Paper process and the current process, why would one now allow local authorities not to be guided by their developed experience and research while undertaking their biggest restructuring exercise hopefully for the next ten years. If one did not force them into that framework, Local Government could establish all kinds of bodies since the number of options were much more open.

BSA recognised that this was not an easy task but felt that it would be useful to explore the kind of potential that there was and she was sure that the Department had some idea how to deal with this.

The Department said that this would be true if there was no draft White Paper on the table which gave an indication of government's intention particularly around Chapter 8. Since this document would be finalised as government policy by July, it would give the municipalities scope to look at its municipal service partnerships. The danger that would arise if only this chapter of the Bill was to be implemented, was that the wrong impression would be created in the market; that there was a privatisation agenda at local government level. This was not the intention of the Bill. The intention of the Bill was to restructure Local Government and to conclude the transformation process at a Local Government level particularly around the internal restructuring of Local Government. The Department was in the process of finalising the cost implications of the transformation process and how the transition would be managed.

Mr Carrim said that restructuring was not something that would stop on 1 November. One had to be clear that there would be a new crop of councillors who had to evolve an Integrated Development Plan. It would seem wrong for the current councillors to completely shape the whole municipal service provision terrain now when one did not know who and how many would be around later. He reiterated that the Department, together with the Finance Department, the Demarcation Board and others, was busy costing the transformation process and representations were being made to Cabinet and the Minister of Finance to secure more funding to ensure that the transition was covered. This issue had to be kept on the Portfolio Committee's agenda and had to be pursued quite relentlessly.

An ANC member noted that Ascora had stated that there should not be "job descriptioned" employment but rather flexible employment in municipalities because the former was costly. She wanted to know how performance of managers would be measured if there was no measurable job description. What would the yardstick be to determine whether managers were performing or not?

Mr Ncalo, from Ascora, said that their input had to be seen as promoting cost-saving measures in the Bill since there were bankrupt municipalities. Ascora suggested following the Public Service's example in order to measure the performance of municipal managers,. The Public Service currently, together with its Coordinating Bargaining Council, were coming up with a test whereby performance would be measured by the Bargaining Council together with the Department of Public Service and Administration. This kind of process should be duplicated by municipalities.

A committee member asked if the reference to "stakeholders" in the BSA submission referred to Business only or to all residents in the community. If it only referred to Business, why should they be the only persons who objected to the content of the Integrated Development Plan. If it included everybody then the question arose whether this would not prolong the implementation process for the IDPs because the objections could last a whole year and thus there would be no implementation.

Ms Lotter said that the term "stakeholder" was used in the submission simply for brevity's sake. They intended it to be interpreted as it was used in the Bill - to include everybody. As far as the possibility of having input into the IDP, BSA believed that in the long term, implementation would be better served. It was certainly their experience of the situation in Gauteng and other provinces, that where one did not have a clear development plan, according to which a town planning tribunal could rule, there would be more objections to planning and development applications. The tribunals had been overloaded as a result. There were instances where a tribunal would not hear an application for fourteen to eighteen months and development could not be implemented until the tribunal had ruled. There was also an appeal process which increased the possibility of delay. Thus an Integrated Development Plan needed to be robust to avoid such delays.

She said that some current policies of National Departments where they required operation and maintenance costs to be recovered, was not worth it from an administrative point of view. As a minimum level of service, where people really could not afford to pay for such services, they should be given them free. In terms of the saved administration costs, it would cost less in the long run. BSA would support such an approach in a tariff policy where one had a specific sensitive policy for the indigent. Many of the problems being experienced with non-payment was because there was no proper way of dealing with the indigent.

In their interaction with National Departments on strategies for services such as water, BSA had indicated support for a degree of cross-subsidisation at the lower use end of basic services. BSA believed that this was perfectly acceptable in a tariff system and one needed to do this. However the way it was done had to be clear so that one did not have a situation that a tariff structure, once it was established and a percentage increase was introduced year on year, that the tariff was then distorted. One needed to know all the time what each component of the tariff was so that one looked at each component of the tariff system each time one reviewed it. Thus there could not simply be an across the board percentage increase since this would start to distort the structure.

Mr Carrim wanted to know to what extent IDPs in the Bill were consistent with planning proposals of other Departments. BSA had raised that when one had the annual reporting by municipalities, account had to be taken of the Water Services Act and the reporting there for example. He said that this kind of issue really had to be dealt with at Cabinet level. When a Bill came to Parliament, it did not have the resources to play this sort of integrating role.

He said that Mr Bhabha and himself in a meeting that morning with the Department of Finance, had negotiated a process for the Department to brief their parliamentary committees on the pending Municipal Financial Management Bill, since it had to be ensued that the Municipal Systems Bill was consistent with it.

Mr Carrim said that he was struck by the Unicomm submission about IDPs and how what was in the Bill did not meet certain needs. He asked Unicom to elaborate on the point they had raised that there had to be a distinction between the strategic and operational parts of the IDP.

Mr Naidoo said that they made a distinction between the strategic analysis one did as part of IDP process and what it took to actually operationalise an IDP. Budgets had to be linked to one's IDP. In the IDP the importance of economic development could not be forgotten since it was a critical part of the success of the municipality.

Secondly he said that there was a constant reference by people to the fact that the Bill should not be elaborate in certain clauses as it would then be too prescriptive. There was a suggestion that SALGA should take responsibility for establishing guidelines in this regard.

Mr Carrim asked Unicom whether they did not believe that National Parliament had a right to provide legislation in respect of these issues. Thus would leaving this to SALGA be appropriate?

Mr Naidoo said that it was Unicomm's view that National Government should provide the broad framework in which municipalities operated. They did not believe that particular aspects of consultation needed to be prescribed. They felt that their national association (SALGA) could provide this framework.

According to Mr Carrim, Unicomm had said that the section on public participation focused more on individual citizens rather than on the needs of communities. Insofar as this was true he would wholly identify with this. He said however that one was not referring to itemised individuals so much as collective entities, stakeholders, community organisations and others. He wanted to know why Unicomm had arrived at this conclusion.

Mr Naidoo said that one could encourage individual participation but it was also good when communities were organised and made representations and inputs into the affairs of Local Government, particularly in a metropolitan area like Durban and Johannesburg. In Durban there were 2.5 million citizens and therefore consultation could become a nightmare given the vast area, the number of people and the development challenges being faced.

Mr Smith pointed out that the Constitutional Court had ruled that there was no autonomy for any of the subsidiary levels of Government, that is, Local and Provincial Government. Twice in the Unicomm submission there was the suggestion that the Bill was unconstitutional by virtue of the fact that it infringed upon the autonomy of Local Government. He felt that there was in fact not much autonomy of Local Government. Effectively it was under the control of one level of Government or the other. South Africa was a unitary state and unfortunately not a federation despite having some federal features.

He said that the Cape Metropolitan Development Council submission seemed to suggest that when it came to participation, it was almost to be equated with decision making. He thought that it was very clear that one had to define participation. Though it referred to participation in the decision-making process, the decision was still the decision of the council. He hoped that they were not suggesting that stakeholders had a vote in the decision itself.

Mr Percy Frederic replied that in Chapter 2, on the legal nature of the municipality - in terms of 2b, the municipality consisted of : (i) the structures, functionaries and administration of the municipality and (ii) the communities, residents and ratepayers of the municipality. Thus ordinary
communities, residents and ratepayers were included in the definition of municipality. In terms of Clause 5 (1)(c) communities, residents and ratepayers had the right to "participate in the decision making processes of the Municipality…" In other words before the decisions were made, civil society representatives had to participate in the processes leading up to the decision making.

Ms Joy Gibbs said that participation by communities in the process of decision making could be a tremendous help in finding common ground and solutions. Communities really had a sense that they had a meaningful role to play and felt good when hearing their own point of view raised in a council meeting.

Mr Carrim said that with the earlier versions of the Bill, there had been proposals that public participation be more firmly embedded. This had to be pruned down because Municipal Council officials understandably said that this could lead to paralysis of Local Government. The Bill had now moved to being a reasonable balance between ensuring that the Bill was constitutional yet that municipalities could govern.

The meeting was adjourned.